Investors in the derivatives will be required to own the
underlying risk, Shi said today in an interview with reporters
in New York. China plans to limit the amount of leverage used in
the contracts to avoid the kind of financial crisis faced in the
U.S. two years ago, he said.

Private swaps complicated efforts to solve the credit
crisis in the U.S. when regulators and market users couldn’t
easily determine how interconnected banks had become through
trading contracts.

China also expects to open its debt markets further to
foreign companies, saying the prospects for their selling debt
will gradually improve during the next 3 to 10 years to
“extraordinarily great” from “promising,” Shi said.

NAFMII was formed by the People’s Bank of China, the
country’s central bank, in 2007 to help develop over-the-counter
financial markets, including bonds, loans, commercial paper,
foreign-exchange and gold.